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The Grip of History and the Scope for Novelty: Some Results and Open Questions on Path Dependence in Economic Processes

Authors

Carolina Castaldi

Giovanni Dosi

Disciplines

Economics

Abstract

The Grip of History and the Scope for Novelty: Some Results and Open Questions on Path Dependence in Economic Processes Carolina Castaldi* Giovanni Dosi † * LEM, Sant’Anna School for Avanced Studies - Pisa and ECIS, Eindhoven Center for Innovation Studies, Eindhoven, The Netherlands. †LEM, Sant’Anna School for Avanced Studies - Pisa 2003/02 January 2004 LLEEMM Laboratory of Economics and Management Sant’Anna School of Advanced Studies Piazza Martiri della Libertà, 33 - 56127 PISA (Italy) Tel. +39-050-883-343 Fax +39-050-883-344 Email: [email protected] Web Page: http://www.sssup.it/~LEM/ Working Paper Series The Grip of History and the Scope for Novelty: Some Results and Open Questions on Path Dependence in Economic Processes∗ Carolina Castaldi†‡ Giovanni Dosi‡ 1 Introduction The very notion of multiple paths of socio-economic change ultimately rests on the idea that history is an essential part of the interpretation of most socio- economic phenomena one observes at any time and place. The property that history matters is also intimately related to that of time irreversibility. In the socio-economic domain and in many areas of natural sciences as well, one cannot reverse the arrow of time – even in principle, let alone in practice – and still recover invariant properties of the system under investigation. That is, in a caricature, you may get a lot of steaks out of a cow but you cannot get a cow out of a lot of steaks... Such ideas of irreversibility and history-dependence are indeed quite intu- itive and, as Paul David puts it, “would not excite such attention nor require much explication, were it not for the extended prior investment of intellec- tual resources in developing economics as an ahistorical system of thought” (David (2001)).1 However, even after acknowledging that “history matters” – and thus also that many socio-economic phenomena are path dependent– challenging questions still remain regarding when and i

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